Segments likely to offer the biggest exits in 2015

27 Dec 2014

With 2015 around the corner, now is a good time to begin speculating which segments could offer up some of the biggest deals of the year. 2014 has certainly been a surprise to many, with mobile messaging (WhatsApp) and virtual gaming (Oculus) providing some of the largest exits, as well as King Digital’s IPO showcasing the company’s London corporate finance roots. With 2014 setting a hot pace for large acquisitions, the following year could be a bigger one yet, as emerging markets drive global Internet usage and digital consumption levels. Here are three segments that can deliver the exit champions in 2015.

The Internet of Things

Signifying the capability to connect everyday devices and appliances, such as fridges, thermostats and watches, to web-based networks, the Internet of Things is set to transform consumer goods that have remained relatively unchanged for decades. The biggest impact will be felt in wearable tech and household appliances, which offer the most practical uses for Internet connectivity. For example, the ability to connect various household devices, such as boilers, air conditioning and fridges, to one operating system would allow the optimisation of energy efficiency and offer homeowners the chance to reduce their utility bills.

Smart fridges and cookers will not break into the mainstream in 2015, but wearable tech and home security devices are already showing signs of maturing. Technology that is connectable to smartphones is especially appealing to consumers, as it offers remote access via relatively simple interfaces or apps. Consumers are not yet ready to control their home through a complex dedicated operating system, but are happy to adopt new low-cost tools that make use of their existing devices. Segments such as health, fitness and energy efficiency offer the strongest near-term prospects for the Internet of Things.

The Sharing Economy

The growth of the peer-to-peer economy, which allows regular consumers to offer other users services and thereby run a self-sustainable business, is set to have an important 2015. Led by taxi mobile app Uber and apartment renting service Airbnb, the sharing economy has become a sore sight for big business and regulators. The trend’s consumer empowerment model offers a major challenge to traditional market players, who are being massively undercut by their own former consumers. At present, the hotel, taxi, and TV (challenged by private YouTube channels, for example) segments are seeing the biggest impact from peer-to-peer technologies, but 2015 will see the evolution of new and innovative areas where consumers can challenge the status quo. The emergence of a new Airbnb in an entirely different segment is likely.

The FinTech Sector

The banking industry is facing a small revolution, as its traditional and largely outdated system is being challenged by a new era of technology-led innovations. Dynamic FinTech start-ups are undercutting traditional players in segments such as international payments, foreign exchange and loans, areas where consumers have long been dissatisfied with hidden charges and high commission rates. Peer-to-peer lending services such as Zopa and Funding Circle are often able to offer consumers and small enterprises better lending conditions as digitalisation is allowing the transfer of money and various financial services at a faster and cheaper rate. However, FinTech remains a slow-burner in emerging markets, where even basic financial products such as bank cards and Internet banking remain out of reach of many consumers, particularly in rural areas. Progress in this area among developing world consumers would certainly bring more value to this segment.

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